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Michael Noonan tells Dáil bank debt deal will be implemented

Michael Noonan said he had confirmation that the June decisions standJan Kees de Jager, Jutta Urpilainen and Wolfgang Schauble issued a joint statement

The Dáil has heard that a deal struck by EU leaders in June on Ireland's bank debt will be implemented.

Finance Minister Michael Noonan said the European Commission confirmed to him that decisions in June to separate sovereign and bank debts, and to allow bank recapitalisation by the EU permanent bailout fund, still stand.

Mr Noonan was speaking in the Dáil about the implications for Ireland of yesterday's statement by the finance ministers of Germany, Finland and the Netherlands.

The three finance ministers said the new permanent EU bailout fund, the European Stability Mechanism, should only deal with future banking problems.

Their statement appeared to indicate that they had rowed back on the agreement the Irish Government said would lead to a deal on Ireland's bank debt.

Today, Taoiseach Enda Kenny insisted that the June decision stood, saying the statement by three finance ministers did not outweigh a formal decision by 27 heads of government.

Fianna Fáil Deputy Michael McGrath said last night's statement was a setback to Ireland's efforts to secure such a deal.

Sinn Féin’s Mary Lou McDonald said that the Taoiseach's position on Ireland's deal was all smoke and mirrors.

She said that in June Sinn Féin had disputed what the Government had claimed was agreed. She said it was oversold.

Mr Kenny said that he did not accept Sinn Féin’s premise.

He said Sinn Féin did not want a deal and that all it wanted was misery.

Independent TD Shane Ross said that the statement was a disaster, and questioned whether or not the Government understood the seriousness of the statement.

The Department of Finance said that last night's statement was only part of ongoing discussions, which will continue over the coming weeks between eurozone finance ministers and heads of government.

In Brussels, the European Commission also said last night's statement by Germany's Wolfgang Schauble and his Dutch and Finnish colleagues Jan Kees de Jager and Jutta Urpilainen was part of an ongoing debate, and that June's decisions stand.

There were fears the statement could affect Ireland's borrowing costs, which had been steadily falling since the June summit.